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Denied life insurance

The top reasons why your life insurance application may be declined and what you can do.

If you’ve been hit with a life insurance denial, there’s probably one question on the tip of your tongue: Why? The reality is that there are myriad reasons why a life insurer might deny your application for cover. Let’s take a closer look at some of the most common reasons and what your options are if you’re ever denied life insurance.

What options do you have if you are denied life insurance?

If your life insurance application is rejected, there are still plenty of things you can do to find the cover you need:

Find out why your application was denied. You have a right to know why an insurer won’t cover you, so ask for details of why you can’t get cover. Once you know what the problem is, you may be able to fix it – for example, you could quit drinking, lose weight, or change your diet and exercise regime to lower cholesterol levels.

Check your medical results. If your medical test for life insurance turned up some surprising results, get your own doctor to take a look at those findings and double-check them. You may be able to prove that the initial results were incorrect.

Shop around. Research other life insurance providers to find out what criteria they use when assessing a life insurance application. Something that’s a deal-breaker with one provider may be acceptable with another. An insurance broker can be a huge help with this process.

Consider life insurance through super. You may already have some form of life insurance through your superannuation account. It’s worth checking with your super fund to find out what’s covered by your policy, what’s excluded, and whether it’s possible to increase your level of cover if required.

Must void: A 'formal decline' on a life insurance application

A formal decline occurs when an insurer officially refuses to provide you with life insurance cover. Not only is this a frustrating and worrying situation, but it can also affect your ability to access life insurance in the future.

Why? When you apply for life cover, you’re legally bound to disclose any previous cover refusals to the insurer. This is usually covered by a question such as “Have you ever been refused life insurance for any reason?” during the application process.

And before you even think about it, “forgetting” to disclose a formal life insurance decline is not an option, as this could give your insurer the right to reject any future claims.

Being denied life insurance is far from ideal but it’s not the end of the world. In many cases, you’ll still be able to find the cover you need to provide financial protection for yourself and your loved ones.

So why is life insurance denied?

Health reasons

The most common reasons for a denied life insurance application have to do with the applicant’s health. Some of the common medical issues that insurers could baulk at include:

High cholesterol. Heart disease is a leading cause of death in Australia, killing 1 person every 12 minutes, while stroke is the third leading cause of death. High cholesterol levels can cause both of these conditions and could be enough for an insurer to reject your application.

High blood glucose. High blood sugar levels lead to type 2 diabetes, a condition that causes a wide range of health problems and is the fastest growing chronic condition in Australia.

Being overweight or obese. Being overweight puts you at a higher risk of a wide range of health problems and complications. While only carrying a little extra weight won’t necessarily mean your application is rejected, it could result in higher premiums.

Positive drug test. If you return a positive drug test, don’t expect anyone to insure you. This is not only because of the many health risks drug pose, but also the fact that drug users are more likely to find themselves in hazardous situations.

HIV/AIDS. HIV and AIDS are both seen as serious conditions that can have a major impact on your life expectancy.

Mental illness. If you suffer from a mental illness, for example depression or anxiety, you may not be able to access cover. However, the insurer will consider the seriousness of your condition and the success of any treatment when deciding whether or not to provide cover.

Cancer. If you’ve had cancer in the past, your chances of accessing life insurance are drastically reduced. However, the insurer will determine your level of risk based on the type of cancer you had, how far it progressed and how long you’ve been in remission.

Positive alcohol marker or elevated liver function. The presence of carbohydrate deficient transferrin (CDT) in your blood is a telltale sign that you’re a heavy drinker. CDT not only causes serious damage to your body but also increases the likelihood of you getting into life-threatening situations. Signs of elevated liver function are also a red flag that you’re consuming an excessive amount of toxins.

Hepatitis. If you test positive for Hepatitis B or C, your application may be rejected.

Blood or protein in urine. The presence of blood or protein in your urine could be an indicator of serious kidney problems. However, it could also be a sign of something far less sinister, so further testing may be required if you want to qualify for cover.

Other reasons why you would be denied life insurance cover

Your life insurance application may also have been denied for a reason that has nothing to do with your health, such as if:

You work in a hazardous occupation. If your working environment or regular duties expose you to a higher risk of illness or injury than the average job, there’s a possibility an insurer may not cover you. Examples of risky jobs that may not be covered by a life insurer include commercial fisherman, miner, farmer, tree lopper, defence force members, firefighters and garbage collectors. You can also check out the list of Australia’s most dangerous jobs, which is compiled based on data from Safe Work Australia.

You participate in dangerous pastimes. When you apply for life insurance, you’re asked questions about the hobbies and pastimes you use to fill in your spare time. If you’re a keen BASE jumper, skydiver, pilot or scuba diver, or if you regularly participate in a range of other extreme sports, that could be the reason why your application was rejected.

You have a poor driving record. Car accidents are a common cause of death for people who are otherwise in perfect health. With this in mind, if you’ve been involved in multiple accidents, if you’ve got a drink-driving or drug-driving conviction, or if you’ve ever had your licence suspended or revoked, it won’t look good on your life insurance application.

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An insurance researcher and writer for finder.com.au who loves finding an answer to the question "Am I covered for ________?" Maurice has also completed a Tier 1 Life Insurance and a Tier 2 General Insurance Certification under ASIC's Regulatory Guide 146. This means he can confidently provide general advice for life insurance and non-life insurance products.

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